Greencoat Capital acquires 39 MWe Sleaford Renewable Energy Plant from Glennmont Partners

Greencoat Capital LLP (“Greencoat”) has completed the acquisition of Sleaford Renewable Energy Plant in Lincolnshire from Glennmont Partners. The investment was made with funds from RPMI Railpen (“Railpen”), the investment manager for the £30bn Railways Pension Scheme, and Greencoat Renewable Income (“GRI”), the diversified fund, with commitments from UK Corporate and Local Government Pension Schemes.

The transaction represents Railpen’s first investment partnership with Greencoat, the UK’s largest renewables sector-focused investor, with approximately £5.0 billion under management. Greencoat will operate Sleaford with involvement from investors on strategic matters. The terms of the transaction are not being disclosed.

Sleaford is an operational 39 MWe renewable CHP plant, which uses a blend of straw and sustainable woodchip to generate renewable power and heat. The plant benefits from well contracted Governmentbacked cashflows (2.0 Renewable Obligation Certificates (ROCs) per MWh) and has circa 15 years of ROC life remaining.

Located within the ‘Grain Belt’, in Lincolnshire, the plant provides a reliable route to market for straw, an agricultural by-product which can represent an additional income source for local farmers. Heat generation by the plant is provided to the local swimming pool and other community facilities and the plant has recently signed a new community funding agreement with the council.

Sleaford is the second biomass plant acquired and operated by Greencoat following the acquisition of the Templeborough Biomass Power Plant in November 2019 continuing Greencoat’s advance into the bioenergy sector. This is the fourth investment of Greencoat’s recently launched diversified private markets fund, Greencoat Renewable Income LP. The acquisition reflects the appetite of UK pension schemes seeking predictable, secure income cash flows for renewable infrastructure assets.

For Railpen the purchase diversifies the Long-Term Income Fund’s holdings in a portfolio focused on assetbacked investments in real estate and infrastructure. To date the fund’s renewables assets have been concentrated in wind and solar investments, the most recent of which were last year’s acquisitions of Tralorg Wind Farm, in South Ayrshire, and Carraig Gheal Wind Farm, in Argyll and Bute.

Minal Patel, Partner at Greencoat Capital, said:
“Sleaford is a high-quality asset that will deliver predictable cashflows and significant inflation protection over the long term, helping our clients meet their liabilities. It also plays an important role in the area, supplying sustainable heat to local community facilities and providing arable farmers with a reliable offtake for their excess straw. We look forward to assuming stewardship of the plant as part of our strategy to build our portfolio of diversified renewable energy investments.”

Lewis Vanstone, Deputy Portfolio Manager of Railpen’s Long-Term Income Fund, said:
“The project is an ideal match for the Long-Term Income Fund’s continued focus on investing in a diversified portfolio with sustainable, long-dated and asset-backed income characteristics, particularly in the current environment. We hope to continue playing an active role in the UK’s transition to a low carbon economy while securing stable cashflows for our members. We are delighted to be partnering with Greencoat Capital in the acquisition of Sleaford. We look forward to working with Greencoat, and to growing this relationship.